| Share-based Payment Arrangement [Text Block] |
Note 14. Stock-Based Compensation
The Company rolled forward certain vested options from the Predecessor (see discussion below) to 2,783,479 equivalent vested options in the Company. No incremental compensation costs were recognized on conversion as the fair value of the options issued were equivalent to the fair value of the vested options of the Predecessor. Exercise prices for those options range from $0.87 to $6.09.
During 2019, pursuant to the Concrete Pumping Holdings, Inc. 2018 Omnibus Incentive Plan, the Company granted stock-based awards to certain employees in the U.S. and U.K. All awards in the U.S. are restricted stock awards while awards granted to employees in the U.K. are stock options with exercise prices of $0.01. Regardless of where the awards were granted, the awards vested pursuant to one of the four following conditions:
| |
(1) |
Time-based only – Awards vest in equal installments over a five-year period. |
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(2) |
$13 market-based and time-based vesting – Awards will vest as to first condition once the Company’s stock reaches a closing price of $13.00 for 30 consecutive trading days. Once the first vesting condition is achieved, the stock award will then vest 1/3 annually over a three-year period. |
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(3) |
$16 market-based and time-based vesting – Awards will vest as to first condition once the Company’s stock reaches a closing price of $16.00 for 30 consecutive trading days. Once the first vesting condition is achieved, the stock award will then vest 1/3 annually over a three-year period. |
| |
(4) |
$19 market-based and time-based vesting – Awards will vest as to first condition once the Company’s stock reaches a closing price of $19.00 for 30 consecutive trading days. Once the first vesting condition is achieved, the stock award will then vest 1/3 annually over a three-year period. |
On October 29, 2020 almost all of the then-outstanding stock awards were modified as follows:
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(1) |
113 awards for 113 employees accepted a modification to their restricted stock awards (if U.S. employees) or stock options (if U.K. employees) with market-based vesting conditions as follows: |
| |
o |
The price vesting targets of $13.00 per share, $16.00 per share or $19.00 per share were reduced to $6.00 per share, $8.00 per share or $10.00 per share, respectively |
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o |
The market-based awards were exchanged on a 2-for-1 exchange ratio. In total 3,816,450 market-based awards were exchanged for 1,908,165 market-based awards |
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(2) |
18 awards for 18 employees had their restricted stock awards (if U.S. employees) or stock options (if U.K. employees) with market-based vesting conditions (the same $13/$16/$19 price targets outlined above) modified as follows: |
| |
o |
Each individual's total award was split into the following: (a) 46% of time vesting shares that vested on December 6, 2020, (b) 15% of time vesting shares which will vest ratably 1/3 each year on December 6, 2021, 2022 and 2023, and (c) the remaining 39% will initially vest based on reduced price vesting targets of $6.00 per share, $8.00 per share or $10.00 per share. Once the first vesting condition is achieved, the stock award will then vest 1/3 annually over a three-year period. |
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o |
In the aggregate, 1,381,426 stock awards were modified as follows: |
| |
(a) |
635,455 shares vested on December 6, 2020,
|
| |
(b) |
207,215 shares will vest ratably 1/3 each year on December 6, 2021, 2022 and 2023, and |
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(c) |
538,756 shares will vest based on reduced price vesting targets of $6.00 per share, $8.00 per share or $10.00 per share |
As a result of the modifications, and in accordance with ASC 718, the Company updated the fair value of each modified award to be equal to the following:
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● |
Unrecognized stock-based compensation expense as of October 29, 2020 immediately before the modification plus |
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● |
The greater of $0 or the difference between fair value of new award immediately after modification less the fair value of old award immediately before modification |
The fair values for the above awards were calculated using a Monte Carlo simulation model and the updated fair value of the stock award is expensed over the new service period for the new award. As a result of the modifications, the Company recorded $5.9 million of compensation expense on day 1 of the modification as the requisite service period is zero. Outside of the unrecognized compensation expense for all other awards, no incremental costs are expected to be incurred in the future.
As of January 31, 2021, the Company has the following outstanding stock-based awards:
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(1) |
Time-based only – Awards vest in equal installments over a three or five-year period. |
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(2) |
$6 market-based and time-based vesting – Awards will vest as to first condition once the Company’s stock reaches a closing price of $6.00 for 30 consecutive trading days. Once the first vesting condition is achieved, the stock award will then vest 1/3 annually over a three-year period. |
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(3) |
$8 market-based and time-based vesting – Awards will vest as to first condition once the Company’s stock reaches a closing price of $8.00 for 30 consecutive trading days. Once the first vesting condition is achieved, the stock award will then vest 1/3 annually over a three-year period. |
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(4) |
$10 market-based and time-based vesting – Awards will vest as to first condition once the Company’s stock reaches a closing price of $10.00 for 30 consecutive trading days. Once the first vesting condition is achieved, the stock award will then vest 1/3 annually over a three-year period. |
Included in the table below is a summary of unvested awards at January 31, 2021, including the location, type of award, shares outstanding, unrecognized compensation expense, and the date that expense will be recognized through. In addition, while the table below provides a date through which expense will be recognized on a straight-line basis, if at such time the market-based stock awards vest earlier than the Monte Carlo simulation derived service period, expense recognition will be accelerated.
| Location |
|
Type of Award |
|
Shares Unvested at January 31, 2021 |
|
|
Weighted Average Fair Value |
|
|
Unrecognized Compensation Expense at January 31, 2021 |
|
Date Expense will be Recognized Through (Straight-Line Basis) |
| U.S. |
|
Time Based Only |
|
|
866,953 |
|
|
$ |
6.20 |
|
|
$ |
4,321,570 |
|
12/6/2023 |
| U.S. |
|
$6 Market/Time- Based |
|
|
580,091 |
|
|
$ |
6.06 |
|
|
|
3,306,662 |
|
1/22/2025 |
| U.S. |
|
$8 Market/Time- Based |
|
|
580,092 |
|
|
$ |
5.35 |
|
|
|
2,931,121 |
|
5/1/2025 |
| U.S. |
|
$10 Market/Time- Based |
|
|
580,106 |
|
|
$ |
4.72 |
|
|
|
2,593,411 |
|
7/9/2025 |
| U.S. |
|
$6 Market/Time- Based |
|
|
150,697 |
|
|
$ |
6.19 |
|
|
|
- |
|
10/29/2020 |
| U.S. |
|
$8 Market/Time- Based |
|
|
150,697 |
|
|
$ |
5.47 |
|
|
|
- |
|
10/29/2020 |
| U.S. |
|
$10 Market/Time- Based |
|
|
150,706 |
|
|
$ |
4.83 |
|
|
|
- |
|
10/29/2020 |
| U.S. |
|
$13 Market/Time- Based |
|
|
1,925 |
|
|
$ |
3.86 |
|
|
|
5,524 |
|
5/4/2024 |
| U.S. |
|
$16 Market/Time- Based |
|
|
1,925 |
|
|
$ |
3.46 |
|
|
|
4,913 |
|
8/27/2024 |
| U.S. |
|
$19 Market/Time- Based |
|
|
1,925 |
|
|
$ |
3.15 |
|
|
|
4,351 |
|
11/19/2024 |
| U.K. |
|
Time Based Only |
|
|
136,685 |
|
|
$ |
6.08 |
|
|
|
602,123 |
|
12/6/2023 |
| U.K. |
|
$6 Market/Time- Based |
|
|
84,591 |
|
|
$ |
5.85 |
|
|
|
460,006 |
|
1/22/2025 |
| U.K. |
|
$8 Market/Time- Based |
|
|
84,591 |
|
|
$ |
5.16 |
|
|
|
407,212 |
|
5/1/2025 |
| U.K. |
|
$10 Market/Time- Based |
|
|
84,602 |
|
|
$ |
4.55 |
|
|
|
360,018 |
|
7/9/2025 |
| U.K. |
|
$6 Market/Time- Based |
|
|
28,885 |
|
|
$ |
6.18 |
|
|
|
- |
|
10/29/2020 |
| U.K. |
|
$8 Market/Time- Based |
|
|
28,885 |
|
|
$ |
5.46 |
|
|
|
- |
|
10/29/2020 |
| U.K. |
|
$10 Market/Time- Based |
|
|
28,886 |
|
|
$ |
4.82 |
|
|
|
- |
|
10/29/2020 |
| Total |
|
|
3,542,242 |
|
|
|
|
|
|
$ |
14,996,911 |
|
|
Note: The $13/$16/$19 Market/Time Based shares noted above relate to the shares not exchanged in the October 29, 2020 modification discussed above.
Stock-based compensation expense for the three-month periods ended January 31, 2021 and January 31, 2020 was $0.7 million and $1.5 million and has been included in general and administrative expenses on the accompanying consolidated statement of income.
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